How To Profit From Apple's iWatch, Nike's FuelBand and Google's Glass

Over the last few years we’ve witnessed an evolution in mobile. The industry has shifted from basic mobile phones and feature ones to smartphones. That has led to a change in how we utilize these mobile devices from phone calls and text to gaming, streaming audio and video, social networking and more.

What hasn’t changed, however, has been the form factor. While device size has changed -- from the ultra slim Motorola (GOOG) Razr to a larger smartphone, say one of Samsung’s Galaxy class devices -- the form factor has still be one that involves a device that one must hold using ones hands.

That looks like its about to change.

The Internet has been rampant with chatter over a watch like product from Apple (AAPL), dubbed “the iWatch.” As some say, where there is smoke there is usually fire but in this case Apple has filed a number of patents on wearable computing. A newer patent filing regarding a wrist mounted flexible screen -- think a slap on bracelet -- only adds to that speculation.

Wearable computing is not only not new, but it’s had its fair share of story stocks in the past. Back in the day -- think more than 10 years ago -- Xybernaut Corp. was working to bring wearable computing solutions to the market. A number of display companies including the late Three-Five Systems and others were working on wearable display goggles. Having looked at those companies back then I can clearly say that the solutions were not ready for prime time for a number of reasons. Connectivity was not there. Computing power also not there. Moreover, the form factors were less than compelling.

Today, however, we’re seeing a new class of wearable computing products. Nike’s (NKE) FuelBand, FitBit’s products such as the Flex band and Zip activity tracker, and now Under Armour’s (UA) new E39 performance monitoring system are all examples.More than just those three companies are targeting this market -- others include Jawbone, Pebble, MetaWatch and Misfit Wearables.

For lack of a better term, these mobile health devices and others like them share exercise and activity date with your smartphone or computer to give you real time feedback. This has given rise to the term “mHealth” and we’ll be hearing more about this next week at the 2013 Mobile World Congress.

On a side note, if you’ve paid attention to the obesity problems in this country, something I do as part of my Living Longer Lives PowerTrend, then you know what a dilemma we have on our hands in terms of obesity and the other health issues it gives rise to. I’ve always believed that constructive feedback -- good and bad -- can be a great way to motivate people. Hopefully these devices will prove helpful in that regard.

Back to wearable computing.

Strides in design, battery technology, computing and connectivity are ushering in a new era of wearable computing. No longer bulky and making one look like they have to wear a utility belt, a design such as Apple’s potential iWatch, the rumored Samsung smart watch or even Google’s (GOOG) Glass project are far more palatable.

Between the two, I’m more inclined to go with the watch design combined with a Bluetooth headset to talk and listen be it to phone conversations, music, podcasts or whatever. With Apple’s dialing would be easy thanks to Siri. In terms of products, the iWatch could very well be the answer to a smaller form factor, cheaper iPhone product that Wall Street is looking for Apple to deliver.

Should Apple, Samsung and others bring these connected watch products to market, overtime its bound to play out just like the smartphone market -- frantic product announcements will follow as more players look to get into this latest growth market. Prices and margins will eventually compress forcing players to exit. One of the questions about the potential connected watch -- and this goes for Google’s Glass product as well -- what’s the real addressable market? Another is how fast will people ditch their smartphone to run out and buy the latest new new thing?

Those questions as well as a host of others come to mind when I don my investing hat. There is no doubt that mobile is moving beyond mobile phones, smartphones and tablets into mHealth devices, home automation and remote monitoring, and other markets. I continue to prefer the “bullets not the guns” way of looking at this and that means key technology companies over device vendors. If we’re talking a new set of mobile devices, that means looking at companies like Qualcomm (QCOM), ARM Holdings (ARMH), Broadcom (BRCM), Skyworks Solutions (SWKS) and others.